Aug 12, 2009

Selling less of more

The thing about breadcrumbs...sometimes the birds eat 'em, or sometimes a well-meaning soul brooms them away. I can't remember now what led me to The Long Tail but it was probably a capsule review, either in print or online.

BTW that link goes to a YouTube promotional video for the book from the UK. Really tells the story in less than two minutes. I went looking for an image of the powerlaw curve that appears endlessly in the book and thought the video was even better.

The idea of the book is in the subtitle - Why the Future of Business Is Selling Less of More. Author Chris Anderson says traditional retail focuses on hits, selling the most units possible of the best-selling items. Amazon, Netflix, and iTunes are examples of businesses getting a surprising portion of their revenues, like a third or half, from non-hits.

Huge inventories that peek in every niche and cranny can be offered as easily as the shelf-space-limited greatest hits selections of bricks-and-mortar stores. Purely digital merchandisers like iTunes have it easiest, but online purveyors of hard goods can stock enormous centralized warehouses, print/create on demand, or simply broker a connection between widely scattered owners or manufacturers and would-be customers.

Hence a company called Ecast supplies bars with digital jukeboxes "stocking" 10,000 albums. Compare to the hundred or so you might find on a regular jukebox and you get the idea. I love Anderson's story of how he was fooled when asked by Ecast CEO Robbie Vann-Adibe to guess how what percentage of those albums sold at least one track per quarter. Anderson knew he was being set up but played along. Traditional retailing suggested 20%, so he guessed 50% just to be wild and crazy. Turned out the answer was 98%.

Curious about how many titles are stocked by Wal-Mart, the nation's biggest music retailer, versus iTunes? Or the number of articles in the Encyclopedia Brittanica as compared to Wikipedia? The answers are in the book. it's important stuff for business people (and for those like me who are simply curious about what the heck is going on) and enormously entertaining.

This is just the latest in a series of books I've stumbled onto starting with that Bob Edwards radio interview of a few years ago. I tried to think of some concept that ties them together, no matter how loosely. I guess it's my compulsive need to pull order from disorder, to see breadcrumbs even if the sidewalk is bare.

I came up with New Connections, since so many of these modern ideas seem to relate to how people are finding each other in new, digitally-enabled ways. I even made a website on that title, but it's not on the Internet...yet. In it I summarize five books and one incredible web site, called The Cluetrain Manifesto. All aboard...

A lot of these ideas seem counter-intuitive. Acting on them suggests a competitive advantage for those who like to succeed, and don't we all? OTOH the people who cling to "the way we've always done it" are like the guy whose company inspired him to coin the phrase "cluetrain," at least according to Wikipedia. He said the cluetrain stopped there four times a day for ten years and they never took delivery.

Breadcrumb to go: The Wisdom of Crowds, by James Surowiecki. Referenced in The Long Tail and one I'll plan to read.

No comments:

Post a Comment